The Federal Reserve has managed to check the wording of the commentary on monetary policy so delicately that it is simply impossible to draw any conclusions at all. Moreover, there was no hint of what would happen with the refinancing rate, and everything remains the same. In fact, investors remain completely unaware of how the Federal Reserve will behave. So only one thing is clear - no sudden movements, no one will do. Nevertheless, the question is still open whether there is a likelihood of a decrease or increase in the refinancing rate. Thus, investors continue to remain ignorant. However, this ignorance is such that it is not clear where to run. So the pound stayed where it was.
The tension of the market participants was such that no one paid attention to macroeconomic statistics, which showed an increase in housing prices in the UK by 0.5%. In annual terms, the growth rate of housing prices accelerated from 1.4% to 1.9%. However, the market was not up to it.
Housing prices from Nationwide (UK):
A similar fate awaited American statistics. So, wholesale inventories decreased by 0.1%, which turned out to be worse than forecasts that predicted a decrease of 0.2%. At the same time, the previous results were also reviewed for the worse, from -0.1% to + 0.1%. Meanwhile, stocks are not decreasing, and this suggests that there are not so many prospects for the growth of industrial production. In addition, the number of pending home sales decreased by 4.9% over the month. In annual terms, growth slowed from 7.4% to 4.6%. As we can see, the American statistics was purely negative, but because of the expectations of the outcome of the meeting of the Federal Committee on Open Market Operations, no one paid attention to this.
Unfinished Home Sales (United States):
The main event today is the meeting of the Board of the Bank of England. Moreover, it is actively discussed in a number of media precisely the possibility of lowering the refinancing rate just today. Let me remind you that this will be the last meeting of the Board of the Bank of England for Mark Carney, as its chairman. However, if you look at interest rate futures, it is most likely that a decrease in the refinancing rate will happen only in the middle of summer. Therefore, there are two different scenarios.Given the incredible tension in the market, which is reflected in the fading quotes, any decision will lead to something like panic and hysteria and the Bank of England will clearly unable to verify the wordings as it did the Federal Reserve. The situation is somewhat different. So, if the rate is really lowered, then the pound will immediately rush down which is significant. However, maintaining the rate at the current level, of course, will lead to an increase in the pound, but not so significant. Thus, before the announcement of the results, you should not take risks, but rather wait, and continue to act on the situation. The movement will be strong and last a long time, so you won't be late.
Refinancing Rate (UK):
In terms of technical analysis, we see an extremely strong slowdown in quotes, where accumulation is still conducted within the psychological level of 1.3000. In fact, this process has been going on for several days, which signals the readiness of the upcoming acceleration.
Considering the trading chart in general terms, we see that there is a sequential compression of the amplitude in the period of six weeks. The current phase has extremely low volatility indicators, which signals a slowdown and confirms the judgment of speedy acceleration.
It is likely to assume that this kind of accumulation, within the control level of 1.3000, will be replaced by impulse-inertial candles, where it is not necessary to perform hasty actions, but rather wait for the most interesting moment to enter. Moreover, the tactics of the work are built in terms of the analysis of price fixing points, as well as the behavior of quotes, where the values of 1.2965 and 1.3040 are given special attention.
Concretizing all of the above into trading signals:
- Long positions are considered in case of price fixing higher than 1.3040, not a puncture in the shadow of a candle.
- Short positions are considered in case of price fixing lower than 1.2965, not a puncture in the shadow of a candle.
From the point of view of a comprehensive indicator analysis, we see a constant downward interest in all technical instruments. It is worth considering that the minute intervals are not taken into account, due to the accumulation and due to which we get a multidirectional signal.
